How the Stock Market Works
You know the iconic images but do you know what’s happening?
The organized chaos is simply amazing to witness.
Millions of transactions processed and billions of dollars change hands each day with flawless precision.The stock market is a part of every day life. Whether you are an active investor or not it’s weaved into our culture as much as the box score of your favorite team.
Welcome to this Introduction to common stock, the stock market and the business of bringing buyers and sellers together.
Common stock is the most popular form of equity in a corporation. When you hear stock prices went up or down today, they are referring to common stock. Stock certificates represent proof of the shares of stock you own.
A stock market is the concept of a place to buy and sell securities of publicly traded companies.
A stock exchange is where the transactions actually takes place.
The NYSE is also known as the “Big Board.” It has one of the richest traditions in modern finance. From the infamous Jesse Livermore, to the powerful JP Morgan to the empty hallowed trading floor, a world of history can be felt simply walking by the building in downtown NYC.
The NASDAQ is not located in NYC…
That’s a studio.
When it first began trading on February 8, 1971 it was the worlds first electronic market. At first it was merely a computer “bulletin board” system and did not actually connect buyers and sellers.
The NYSE Specialist and the NASDAQ market Maker have gone the way of the dinosaur.
Not quite extinct but their reign is still revered.
Walk onto the floor of the New York Stock Exchange and the sense of history takes over your senses. Goose bumps guaranteed.
Why does a company who announces bad earnings see it’s stock price go higher? How about when a major analyst upgrades a company? Perhaps in the morning there was a rally off the news but by the end of the day the stock is trading at the low?
Why does this happen?
Read on to learn one of the most powerful and useful topics in all of trading…